News Nook: Oct 7, 2024

Indian Sector Specific News:

A) Indian BFSI:

1) Public Sector Bank Profits Expected to Decline Slightly in Q2 FY25

• Public sector banks are expected to see a 0.6% decline in profits quarter-on-quarter (QoQ) for Q2 FY25.
• Despite this, their profits are projected to rise by 17.2% year-on-year (YoY).
• Private sector banks are forecasted to show modest growth, with a 12% YoY increase in Pre-Provision Operating Profit and 5% growth in Profit After Tax (PAT).
• Source: Economic Times

2) LIC Increases Stake in Bank of Maharashtra Following QIP

• LIC raised its shareholding in Bank of Maharashtra from 4.05% to 7.10% through a Qualified Institutional Placement (QIP).
• The allotment involved 25.96 crore equity shares at an average cost of ₹57.36 per share.
• This increase follows LIC’s regulatory filing under SEBI guidelines, with its holding crossing 5% after the 3.376% equity share allotment.
• Last month, LIC reduced its stake in Mahanagar Gas Ltd (MGL) from 9.03% to 6.939%.
• Source: Financial Express

3) India-UAE Rupee-Dirham Trade Deal: Key Points

• India and UAE have started using their local currencies, Rupee and Dirham, for bilateral trade, aiming to reduce dependence on the US dollar and strengthen trade ties.
• The mechanism allows exporters from both countries to receive payments in their local currencies, simplifying transactions and potentially lowering costs.
• Challenges include trade imbalances, currency volatility, and a lack of private sector participation, but the initiative is expected to grow by 2024-25.
• The deal is seen as a way to boost bilateral trade and reduce foreign exchange risks for both nations.
• Source: Elets BFSI - Elets Technomedia

4) Bank Credit in India Grows by 15% in August

• Bank credit in India grew by 15% in August, with strong contributions from agriculture (17.7% growth) and industry (9.8% YoY increase).
• Medium-sized firms saw robust credit growth of 19.2%, while large industries experienced a more moderate 7.7% rise.
• The personal loan segment decelerated to 16.9% growth, while loans against gold jewelry surged by 40.9%.
• Credit in the housing sector also accelerated to 18.8%, with credit card growth softening to 19.9% from 31.4% last year.
• Source: The Statesman

B) Indian Agriculture:

1) Tripura Boosts Agriculture with PM-Kisan Scheme and State Initiatives

• Tripura CM Manik Saha announced Rs 47.68 crore for state farmers under the PM-Kisan scheme, benefiting 2.59 lakh farmers.
• He highlighted new initiatives, including a Unified Farmers Database, Centres of Excellence for scientific cultivation, and the Mukhya Mantri Fasal Bima Yojana.
• Saha praised the Direct Benefit Transfer (DBT) system, which ensures funds reach farmers directly, without middlemen.
• Source: India Today

C) Indian Pharma:

1) AstraZeneca's India Focus: Policy Support Crucial for Growth

• AstraZeneca India MD, Sanjeev Panchal, emphasized the need for policy support, as India remains largely an out-of-pocket healthcare market.
• The company is involved in cancer-related projects and clinical trials to introduce global products faster.
• Globally, AstraZeneca aims for $80 billion in revenue by 2030, with India playing a key role in future growth.
• Source: Business Standard

Indian Economy and Government initiatives:

1) India's Digital Transformation Towards a US$1 Trillion Economy by 2028

• India’s digital economy is expected to reach US$1 trillion by 2028, driven by growing internet penetration, government initiatives, and technological innovations like UPI.
• Government schemes like Pradhan Mantri Jan Dhan Yojana (PMJDY) and Direct Benefit Transfer (DBT) are boosting financial inclusion, supported by increasing mobile and broadband users, especially in rural areas.
• Retail digital payments have surged, with UPI projected to account for 90% of all retail digital transactions by 2027.
• The digital transformation of sectors such as healthcare, education, and e-commerce is accelerating, with digital payments expected to reach US$10 trillion by 2026.
• Source: Indbiz

2) Government Allocates ₹1,000 Crore to Boost Space Startups

• The Indian government has allocated ₹1,000 crore for a venture fund to support space startups, with the initiative launched in the first 100 days of the Modi 3.0 government.
• India has seen a surge in space startups, growing from single digits to over 200 in just a few years. Some of these startups, such as Vikram-S, India's first private rocket, have global potential.
• India is positioning itself as a leading space nation, evidenced by the success of Chandrayaan-3 reaching the Moon’s South Pole, and 100% FDI is allowed in the space sector to encourage growth.
• Dr. Jitendra Singh revealed that India’s Gaganyaan mission, aiming to send the first Indian into space, is scheduled for 2025, with a test flight planned for late 2024 or early 2025. Space technology is also benefiting sectors like agriculture, urban development, and healthcare.
• Source: smestreet

3) New India-UAE Bilateral Treaty Ensures Investment Protection

• India and the UAE have signed a new Bilateral Investment Treaty (BIT) to replace the expired Bilateral Investment Promotion and Protection Agreement (BIPPA), ensuring continuous investment protection for investors from both countries.
• The UAE is India’s seventh-largest source of FDI, contributing $19 billion from April 2000 to June 2024. India has invested $15.26 billion in the UAE during the same period.
• The new BIT assures investors fair treatment, protection against discrimination, and an independent arbitration forum for dispute resolution, while also preserving the government's right to regulate.
• Bilateral trade between the two nations is set to surpass $100 billion before 2030, with the UAE being India's third-largest trading partner and second-largest export destination.
• Source: morungaexpress

Indian Stock Market Overview:

• Jigar Patel predicts that after a decline of over 1,100 points, the Nifty 50 index may bounce back toward the 25,300–25,500 range, with support levels at 24,800–24,600.
• The Bank Nifty index is also expected to recover, targeting the 52,000–52,500 zone, supported by positive signals from the RSI.
• The Q2 earnings season in India is expected to show muted growth, with potential downgrades for stocks as the Nifty 50 index has fallen 4.5% since late September due to rising tensions in West Asia and increasing crude oil prices, impacting India's trade deficit.
• The IT sector is likely to report slight QoQ growth, but overall performance may be hindered by client budget constraints and delayed wage hikes. Similarly, the banking sector's profits are expected to be subdued, with advances projected to grow only 4.05%.
• Market sentiment remains cautious, as previous high valuations and ongoing challenges could affect earnings growth, particularly for midcap stocks compared to large caps.

International News:

• Strong performance of international funds: Equity mutual funds saw returns up to 20% from September 30 to October 4, with international funds leading the charge, notably the Mirae Asset Hang Seng TECH ETF FoF at approximately 19.70%.
• Limited positive returns: Only international and arbitrage funds generated positive returns during this period, while other equity categories experienced losses.
• Top funds included the following: Mirae Asset Hang Seng TECH ETF FoF: 19.70%, Edelweiss Gr China Equity Off-Shore Fund: 6.61%, PGIM India Emerging Markets Equity Fund: 4.16%, Kotak Global Emerging Markets Fund: 2.33%, and Axis Greater China Equity FoF: 2.29%.